California Court Says Insureds Can Stack Policies For Max Coverage

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Partner Larry Golub was quoted in a Law360 (subscription required) article published on Aug. 9, 2012, about a key California Supreme Court ruling that insurance policyholders with long-term property damage and personal injury claims could force carriers to cover damage outside their policy periods and stack coverage to maximize recovery.

The case, State of California v. Continental Insurance, stemmed from battle between the state of California and six excess insurance over an environmental cleanup estimated to cost as much as $700 million. The court found in the high-profile case that, “all sums” language in California's excess insurance policies means that carriers must cover all damage up to their policy limits and that stacking is allowed because the policies lacked language specifically prohibiting the practice.

Rather than stacking, the insurance companies involved in the case preferred a formula whereby carriers would be assigned a specific amount of damages to cover.

"There were other ways to allocate the loss other than saying basically all the policies, all the time, especially in the case where you had a sophisticated insured like the state of California that chose for a good portion of the time not to insure itself," Golub, who represents insurance companies but was not involved in the case, told the publication. He also said that he thought the ruling might prompt insurers to start including anti-stacking provisions in their policies.

Click here to read Mr. Golub's full analysis of the decision.

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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